Blumenthal, Six Other Attorneys General, Say Microsoft Maintains Monopolistic Power In Software Market

August 30, 2007 -- Connecticut Attorney General Richard Blumenthal today, along with five other states and the District of Columbia, filed a report demonstrating that the federal settlement with Microsoft, and court-imposed Microsoft remedies, have failed to adequately reduce Microsoft's illegal monopoly.

In a report filed with the U.S. District Court for the District of Columbia, the attorneys general said that, despite remedies imposed by the court five years ago, Microsoft maintains monopolies in Intel-compatible PC operating systems and in web browsers, and has significantly increased its competitive position in computer server operating systems.

"The Final Judgment has failed to free Microsoft's stranglehold on the software market," Blumenthal said. "My office - working with a coalition of attorneys general - have vigorously enforced the Final Judgment against Microsoft, but the judgment provisions are inadequate to fight Microsoft's market muscle. Our multi-state force will work to identify whether there may be other measures, which we will present to the court to address this shortfall."

Microsoft's Windows operating system still controls 92 percent of the Intel-compatible PC operating system market, the attorneys general said.

While Microsoft's Internet Explorer web browser has experienced some emerging competition from browsers like Firefox, Microsoft still enjoys an 85 percent share of the web browser market. And Microsoft's share of the server operating system market has actually increased from 55 percent in 2002 to 72 percent in 2006.

The multi-state report states says that these statistics demonstrate that Microsoft's market dominance, which Microsoft maintained by using illegal practices to destroy threats from Netscape and Java, has endured. The remedies negotiated by the Department of Justice (DOJ), and imposed by the court, have had little or no discernable success in restoring a competitive marketplace.

Connecticut was one of the original 18 states that, along with the DOJ, sued Microsoft in 1998 for violating federal and state antitrust laws by engaging in predatory practices to crush competitors in order to maintain its monopolistic hold over the PC operating system market.

A 2000 landmark federal court decision ruled that Microsoft had violated the antitrust laws, and ordered the company be broken up. In 2001, the federal appeals court agreed, but - rather than breakup the company - the appeals court sent the case to a new judge to hold hearings and determine appropriate remedies.

In 2001, the Bush Administration's DOJ settled with Microsoft in an agreement criticized by many states and other industry experts as insufficient. In November 2002, a federal court ruling imposed those same remedies.

The attorneys general said that - when the court-imposed remedies expire in November - Microsoft will be empowered again to abuse its market dominance to crush competitors.

Microsoft has already demonstrated this threat in undermining rival "desktop search" products, including Google's Desktop Search. It was only after Connecticut and several other states raised concerns about Microsoft's actions, which potentially violated its court-order, that the company agreed to significant changes to a feature in Windows Vista that would enable consumer to choose from competing desktop search engines.

The states will have limited ability to address these or other concerns about abusive practices by Microsoft after the court judgment expires in November, the attorneys general said.

Source: Connecticut Attorney General